Wednesday, May 18, 2016

4 Strength Trades Thursday | Crude Oil, Gold, E-mini & Euro Futures 05/18/16



“People become really quite remarkable when they start thinking that they can do things. When they believe in themselves they have the first secret of success.”  - Norman Vincent Peale

Notes for Tonight’s Newsletter:
We have some aggressively bearish markets tonight; Crude Oil responded with strength after the inventory report, the S&P looks a bit confused looking for traps, while Gold and Euro are testing major support after monster moves lower today... never a dull moment in the volatile futures markets!

Crude Oil is bearish with three legs and trading at the low of a pending bear channel which tells us that sellers will likely take profit and counter-trend scalpers will look for buying opportunities back to the channel highs where the swing-sellers will be waiting to sell it again.  The bulls had control for most of the session today ahead of the news, but the Inventory Report quickly sent prices lower with three legs down to fill the gap from contract rollover.  The pending bear channel is yet to be confirmed yet but we know that sellers are going to start selling at all the previous swings overhead until this market returns back to the lows or can stay above the 'battle zone' around 49.00.

E-mini S&P is bearish as the sellers try to finish a re-test back to today's lows but a triangle on the chart tells us they might be waiting for a 'trap' above the recent highs before they can get the job done tomorrow.  The buyers had control for most of the session today before price collapsed all the way down to complete a rotation to the 'megaphone' pattern low from earlier this week.  The bears have control of the market at this time with a bear channel that tell us 'swing sellers' will be looking to re-test the 2030.75 low tomorrow.  Looking closely at the chart we can see that the prior swing at 2046.25 was never broken which means there are likely still 'swing sellers' waiting to get into this move which explains the lack of follow-through this afternoon.  Sellers will be looking for opportunities above the prior swings or they need to wait for a breakout-pullback below the triangle lows.

Gold is bearish but an overshoot of the channel low tells the sellers to wait for a bullish correction before they look for more reliable selling opportunities tomorrow while the counter-trend buyers will have an opportunity after they can hold a pullback off these lows.  The bears had control for the entire session today which tells us to expect some profit-taking at the end of the session today, however, we only see a single overshoot of the channel low so there is a possibility that the sellers go for a double-overshoot before we see a correction higher.  Buyers will be looking for that double-overshoot followed by holding a pullback if they want to have the confidence to buy on the way back up to the resistance levels overhead and we know there will be sellers waiting at resistance levels to try and finish the move down to the double-down and triple measured-move targets below.


Euro is extremely bearish this evening with a completed measured-move and testing the low of a pending bear channel which tells us to look for 'bull traps' above recent swing-highs for the most reliable selling opportunities tomorrow.  The euro has been nothing short of chaotic this week and today was no different with the sellers aggressively pushing lower after a successful bear-flag completed the measured-move target and kept going.  There isnt much to use on this chart tonight, which tells us that other traders will most likely use similar levels to make decisions tomorrow.  The bear channel and spike & channel are both questionable but they are the only information that we have to work with.  We cant reliably sell with price this low, but with such aggression going lower we assume that sellers will have pending orders above all the previous swings trying to participate in this move and that is where we will look for buyer-failures to sell it back down.

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